The Business 2.0 website conducted a survey to determine which companies and industries would be the subject of dinner conversations during the Thanksgiving holiday. Since I’ve attended more than one such dinner in my time, I can already tell you that no share or company is discussed on this occasion. Business 2.0, however, nevertheless says that it has conducted a survey. Well, why not? The site reports that people will talk about the Internet, Google (Nasdaq: GOOG), and Shopping.com (Nasdaq: SHOP). Yes, the only Israeli share in the survey is Shopping.com, which had its IPO a month ago, and has already made back its shareholders’ investment, with compound interest.
Business 2.0 says that the public is still infatuated with the Internet. That’s right, the Internet the same industry referred to as the great craze of 2000. The site wonders whether the verdict on this industry may have been premature. The only thing that has really happened is that three years of crisis have postponed the industry’s dream, and the companies that survived have now become big hits. What’s interesting is that today’s events are justifying what the gurus prophesied at the end of the last century. Some of those gurus have disappeared, some were arrested, and some are still alive and kicking, and have emerged stronger than ever take Mary Meeker, for example.
As far the business numbers are concerned, the Internet industry has exceeded even the wildest dreams. I must admit that many people who realized what was happening waited for the bubble to burst, entered the market at the bottom, and made millions.
So what actually happened in the three recession years? Has a bubble taken place, or hasn’t it? Three months ago, underwriter William Blair & Co. held an issue for eCost.com (Nasdaq: ECST) at $4.50 per share, raising $16 million for the tiny California company. The share finished last week at over $20, reflecting a market cap of $350 million. ECost.com has sales of $150 million, and a net profit of $5 million. Is that a bubble? I personally heard a hedge fund manager exclaim, “A market value of $350 million? Really, people, that’s almost for free… “ Is he right? Heaven only knows, but compared with 2000, eCost.com’s share is almost free.
You really have to keep one eye peeled, and hope that some of this Midas touch reaches Israeli Internet shares. BackWeb Technologies (Nasdaq: BWEB), for example, changed direction on October 25, and has since risen by 64%. I noticed that the last time that any investment house whatsoever recommended the company was in April 2002, when Goldman Sachs, no less, lowered its recommendation for the share to something like “Hold”. BackWeb, which reached $0.50 in April 2002, after being at $52 a year earlier, later dropped all the way to $0.15. I don’t know what that tells us about Goldman Sachs, but the events of the past month were not a result of the company’s location in the holy city of Jerusalem; something is happening with the company’s business. BackWeb has signed a long-term contract with Finnish company F-Secure (OTCBB: FSOYF), and received a cash injection.
I’ll finish off with four Israel companies that published impressive announcements yesterday. Given Imaging’s (Nasdaq: GIVN; TASE: GIVN) share took off again after the US Food and Drug Administration (FDA) approved the company’s 14-frame PillCam ESO video capsule for esophageal imaging. I think that the reason the share soared was that the approval activates Given Imaging’s commercial agreement with a subsidiary of Johnson and Johnson (NYSE: JNJ), under which Given Imaging will get $10 million. The Given Imaging share recently reached $45, dropped 40% to less than $27, and has since clambered back up. One big winner will be Elron Electronic Industries (Nasdaq: ELRN; TASE: ELRN), which accumulated Given Imaging shares when they were falling.
Rather like Mind CTI (Nasdaq: MNDO; TASE: MNDO), Top Image Systems (TiS) (Nasdaq: TISA) continues to show improvement quarter after quarter. Whenever the company announces more improvement, the share goes down. Top Image is going great guns in Japan, signing contracts with leading companies, and the share keeps falling. In my opinion, this is a playing field for sane investors, provided there are any left.
Silicom Connectivity Solutions Ltd. (Nasdaq: SILCF) is still piling up the orders (small, but big for the company). It looks like the company has got hold of a winning product. Have you noticed that this is one of the shares that has risen the furthest since the market bottomed out in 2002? Check it out.
Ceragon Networks (Nasdaq: CRNT) charged upwards yesterday, with no announcement. This company needs no announcements. All it needs is for investors to realize the values that it conceals. Oscar Gruss analyst Ehud Eisenstein told me about the company, and I wrote about it. There’s nothing to add; the company has great potential.
Published by Globes [online] - www.globes.co.il - on November 30, 2004